Saturday, August 13, 2016

Risk on into EM etfs and high yields, less into money market and treasuries

Equity funds attracted $6.5 billion of inflows this week, the first inflows into global stocks in a month, as investors returned to U.S. markets and continued to pile into emerging assets, Bank of America Merrill Lynch (BAML) said on Friday.
Emerging debt funds extended their bull run, pulling in $1.6 billion in the week to Wednesday, as investors frustrated with the zero or negative interest rates on offer in developed government bond markets hunted for returns.

The swing into global equities was driven by investors moving into exchange-traded funds (ETFs), where inflows of $10 billion more than offset the $3.5 billion that fled mutual funds.
Emerging bond funds have now taken $18 billion over six weeks - the largest on record, and equivalent to 6 percent of assets under management - in what BAML described as an "EM melt up".
Even markets such as Malaysia, tainted by the 1MDB scandal, are pulling in cash as interest rates fall in Britain, Japan, New Zealand and Australia.
High yield bond funds attracted $1.7 billion and investment grade bond funds pulled in $5.3 billion. Government and Treasury bond funds suffered $800 million in outflows, racking up five straight weeks of redemptions.
Investors also dumped money market funds, withdrawing $3.6 billion, the largest outflows in seven weeks.